Beyond the spin and spiral of false impressions about the crude oil marine transportation contracts, expert analysis and in-depth investigations revealed that contrary to misleading information perpetuated by certain sections of the media about the indenture, the transportation contracts not only conform with extant laws but also serves the dual benefits of saving huge sums of money for the country and fighting the scourge of environmental degradation.
Experts in the oil and gas sector argued recently that the immediate past administration’s decision to award marine transportation contracts for crude oil movements from terminals to the refineries, is not only cost effective but evenly in tune with best environmental practices.
This was the verdict of oil experts in response to a publication by an online news medium, Premium Times. The medium had claimed in its reports that the crude oil transportation contracts awarded under former president Goodluck Jonathan to PPP Fluid Mechanics (PPPFM) and its sister company, Ocean Marine Solutions Ltd (OMS) owned by Captain Hosa Okunbor and Dr. Tunde Ayeni respectively was fraudulent.
Experts argued that, PPPFM and OMS took calculated risks by agreeing to the deal; besides the fact that they may get their hands burnt, “It is sad that the crude oil transportation contract that has benefitted the nation immensely is now being misinterpreted, misrepresented and described as fraudulent by people who are acting on ignorance and bringing the names of the company promoters, Captain Hosa Okunbor and Dr. Tunde Ayeni to disrepute,” according to an analyst.
Industry experts contested Premium Times’ publication claiming that the contract was necessitated by the frequent attacks launched against the Nigerian National Petroleum Corporation (NNPC) and the International Oil Companies (IOCs) operating in the country. The local and international oil corporations suffered persistent attacks on their production and transportation facilities in the wake of an insurgency which began in 2006 by armed militants campaigning for increased local share of oil proceeds for the Niger Delta region.
The experts alleged that organized crime groups are drilling into the pipelines — in turn used to transport crude, gas and condensate — to tap oil into barges for local refining or for sale to vessels waiting offshore. More worrisomely, about 240,000 barrels of crude oil, close to what spilled in 1989 when the Exxon Valdez tanker ran aground off Alaska, leak in the Niger Delta per day.
According to them, to bypass this daunting security and environmental challenges, the NNPC in December 2010 awarded a contract to PPP Fluid Mechanics (PPPFM) and Ocean Marine Solutions Limited (OMS) for the transportation of oil by marine vessels from the Escravos terminal to Warri refinery through an international competitive bidding exercise that included 13 other companies.
It would be recalled that Nigeria’s Warri and Kaduna refineries had been shut for 48 months before the engagement of PPPFM due to a lack of supply of crude oil feed stock. Using the existing pipelines had become uneconomical for the NNPC which spent an average of $121 million to maintain and repair the Escravos to Warri broken crude oil pipeline that had an unusually high and environmentally damaging 40 percent loss of crude oil pumped through it. IOCs had previously borne the brunt of the sabotages until the impact began to hit the Nigerian economy with disastrous consequences.
Shell’s former CEO, Peter Voser, mentioned in 2013 that the company had “seen a marked escalation in security problems and theft in Nigeria in 2013,” which could lead to a loss of “$12bn for the Nigerian government on an annualized basis.”
The Nigerian economy, with more than 170 million people grew at around seven percent annually, between 2010 and 2014 – however, energy constraints remain the major hurdle that could prevent future growth.
Analysts admitted that though the oil transport deal seems complex, it addresses both the security and the transportation risks suffered as a result of pipeline vandalization and huge drop in production and crude oil supplies to the refinery.
“This complexity may well explain the ignorance of those who have been writing to suggest that the deal was favoured by the past administration,” so argued an oil industry operator.
Many informed sources said that the domestic crude oil transportation deal was purely a business transaction involving a sovereign state corporation and private sector operators who had the capacity to deliver on the deal.
Writtten by Bunmi Ogundairo.
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